Statement (A) : The isoquant curves are drawn convex to the origin due to diminishing technical rate of substitution. Statement (B) : The lesser the convexity of the isoquant curve the greater the possibility of the complementarity of the two inputs. Codes :
Statement (A) is correct but (B) is incorrect.
An isoquant shows all combinations of two inputs that produce the same output. Its slope is the marginal rate of technical substitution (MRTS) of labour for capital.
Statement A: As more labour replaces capital along an isoquant, each extra unit of labour can replace less and less capital, so the MRTS diminishes. This makes the isoquant convex to the origin. Statement A is correct.
Statement B: The degree of convexity shows how easily one input can be substituted for the other. A flatter isoquant (less convex, approaching a straight line) means the inputs are close substitutes; a sharply bent isoquant (more convex, approaching an L shape) means the inputs are complements used in fixed proportions. So lesser convexity means greater substitutability, not greater complementarity. Statement B is incorrect.
Hence, Statement (A) is correct but (B) is incorrect.
Similar Questions
Match the items of List - I with the items of List - II and find out the correct matching.
List - I List - II Production functions Name of the shapes of returns to scale (a) \(Q = 10.2\ K^{0.19}\ L^{0.88}\) (i) Constant Returns to scale (b) \(Q = 1.01\ L^{0.75}\ K^{0.25}\) (ii) Diminishing Returns to scale (c) \(Q = 0.84\ L^{0.63}\ K^{0.3}\) (iii) Increasing Returns to scale Codes :
(a) (b) (c)
Important Questions from Production Function
- Match the stages of production with their corresponding characteristics :
(i) Stage-I (a) Total product declines, Marginal product is negative (ii) Stage-II (b) Total product increases at an increasing rate, marginal product positive (iii) Stage-III (c) Total product increases at a diminishing rate, marginal product is zero. - Neo-classical production function has which of the following characteristics ?
(a) Positive and diminishing marginal productivities of the factors
(b) Constant returns to scale
(c) Satisfies Inada conditions
Choose the correct answer from the code below : - Which one of the following is not an Hirofumi Ujawa condition for a well behaved production function ?
- Exponents of the Cobb-Douglas production represent :
- Given the production function $Q = 2 \cdot K^{1/3} \cdot L^{2/3}$, find the output level when 8 units of capital and 27 units of labour are used.
